GM and Chrysler will lead automakers to gushing profits

Article by Christian Andrei, on October 25, 2010

When annual US sales reach 15 million vehicles, General Motors Co. and Chrysler LLC will lead automakers to “gushing profits,” according to Steven Rattner, the former head of the federal government's auto task force.

On Bloomberg Television's “Surveillance Midday with Tom Keene,” Rattner said that GM will be able to make a profit even with fewer US vehicles sold because of GM’s move to cut costs and liabilities during its 2009 bankruptcy proceedings.

Rattner said that the industry underwent a restructuring in order to make money.

Furthermore, Rattner believes that the recovery of the auto industry is slower than had been predicted but that it will later return to a rate of 15 million a year.

Researcher Autodata Corp. said that US automakers in September sold vehicles at a rate of 11.8 million, a marked increase from the 9.4 million units sold the previous year.

Rattner explained that an annual sales rate of 15 million vehicles is necessary “simply to accommodate new drivers and the aging of the fleet.”

However, Rattner didn’t indicate a time frame of when to expect this pace in the US. [via autonews - sub. required]

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